European Central Bank (ECB) President Christine Lagarde said on Thursday that the United States 25% tariffs on the imports from Europe would lower the Eurozone's growth by about 0.3 percentage points in the first year.
"A European response in the form of raising tariffs on US imports would further increase this to about half a percentage point. The brunt of the impact on economic growth would concentrate around the first year after the rise in tariffs; it would then diminish over time, however, leaving a persistent negative effect on the level of output," Lagarde said, speaking before the European Parliament's Committee on Economic and Monetary Affairs.
The ECB president also noted that the trade war would also make the inflation outlook "significantly more uncertain," with the EU retaliatory measures and a weaker euro exchange rate potentially raising inflation by about half of a percentage point.
